“Rich States, Poor States”

by James DeChene

This year’s “Rich States, Poor States” was released this week, and Delaware checks in at 28th for economic performance, and 36th for economic outlook. Performance is calculated by considering state GDP, non-ag employment numbers and domestic migration. No surprise that we come in high (19th) in migration as we are a retirement destination state due to low property taxes and great beaches. For economic outlook, there are 15 areas considered, some in which we score well—no sales tax, low property tax; and some not so well—marginal tax rates on both individual and corporate payers, and average workers compensation costs. These numbers are right around where we were last year: 37th in 2017 and 44th in 2016, but 27th in 2014.
 
In the broader picture, an interesting take away was how net migration will impact congressional seats in the 2020 census.  According to Election Data Services, the following states are poised to gain seats:
·         Texas will gain three, from 36 to 39;
·         Florida will gain two, from 27 to 29;
·         Arizona will gain one, from nine to 10;
·         Colorado will gain one, from seven to eight;
·         Montana will gain one, from at-large to two;
·         North Carolina will gain one, from 13 to 14; and
·         Oregon will gain one, from five to six.

​These states are poised to lose seats:
·         New York will lose two, from 27 to 25;
·         Alabama will lose one, from seven to six;
·         California will lose one or remain even, from 53 to 52 or no change;
·         Michigan will lose one, from 14 to 13;
·         Minnesota will lose one or remain even, from eight to seven or no change;
·         Ohio will lose one, from 16 to 15;
·         Pennsylvania will lose one, from 18 to 17;
·         Rhode Island will lose one, from two to one; and
·         West Virginia will lose one, from three to two.

The “Rich States, Poor States” report lays out these numbers as well, and ties in states' overall tax policy approaches to help explain the migration. If the trend continues, high tax states will continue to lose congressional seats. It will be interesting to see how that changes the makeup on Congress, and their approach to tax policy.